Munich Re has provided $305m catastrophe bond transaction for North Carolina Joint Underwriting Association and North Carolina Insurance Underwriting Association, that transfers hurricane risk in North Carolina to the capital markets.
According to Munich Re, it has acted as joint lead manager in the transaction, reinsured the risk via its US operation and placed the bond with institutional investors in EU and Switzerland via its placement entity.
Munich Reinsurance America has reinsured a portion of two catastrophe hurricane risk layers of the North Carolina Joint Underwriting Association and North Carolina Insurance Underwriting Association which have been fully retroceded to Cayman Islands-registered Johnston Re, providing coverage up to a maximum of $305m.
The company said that Johnston Re has issued two tranches of a principal at-risk variable rate note program with a 3-year risk period. The first tranche uses a ‘drop-down’ feature that will replace expiring Parkton Re 2009-1 bond after one year.
The second tranche will stay for three years at same level directly above first tranche. The issuance was oversubscribed and due to demand upsized from originally announced $200m.
Tony Kuczinski, president and CEO of Munich Reinsurance America, said: Munich Re offers its clients the full spectrum of risk transfer solutions, and the capital markets constitute a good complementary risk carrier for specialized peak risks like North Carolina hurricane. Reinsuring the risk directly in the US means that we offer full credit for reinsurance benefit for our clients in the US market.